Export and Tourism Slump... Thailand's Q2 GDP Stagnates at 1.8% This Year

The Thai economy showed sluggish growth in the second quarter of this year, falling short of market expectations due to the headwinds from geopolitical conflicts between its largest trading partners, the United States and China.

On the 21st, the National Economic and Social Development Council (NESDC) of Thailand announced that the country's gross domestic product (GDP) grew by 1.8% year-on-year in the second quarter (April to June). This was significantly below the market forecast of 3.1%.

Compared to the previous quarter, the seasonally adjusted growth rate was 0.2%, which also fell far short of the market expectation of 1.2%. The confirmed growth rate for the first quarter of this year was revised down by 0.2 percentage points from 1.9% to 1.7%.

The GDP weakness stemmed from a decline in exports and the tourism industry. Exports decreased by 5.7% year-on-year. The Tourism Authority of Thailand maintained its previous forecast that foreign tourists would reach 28 million this year, but it expected a decline in tourism revenue to be inevitable.

Foreign media reported, "Along with the global recession, ongoing geopolitical conflicts have contracted exports, and a decrease in income is expected in the tourism sector, which is a key pillar of the economy."

Since October last year, Thailand has experienced a slowdown in exports as geopolitical conflicts between its largest trading partners, China and the United States, have negatively affected the supply chains of Thai exporters.

The appreciation of the baht against the US dollar has also negatively impacted export prospects by reducing the price competitiveness of Thai products.

[Image source=AFP Yonhap News]

Reflecting the outlook for slower exports, the Thai government has lowered its annual GDP growth forecast for this year from the previous 2.7?3.7% to 2.5?3.0%.

Danucha Pichayanan, Secretary-General of NESDC, warned, "In addition to the headwinds from the global recession, ongoing confusion over the formation of the next government is slowing government budget spending, which could lead to a deterioration in investor confidence."